Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $2.9 million, a 29% increase from $2.3 million in Q1 2024, driven by growth in both service and product revenue [6][12] - Service revenues grew to approximately $2.1 million, up 25% from $1.7 million the previous year, primarily due to strength in ASR subscriptions and full-service maintenance agreements [6][12] - Product revenues increased by 44% to about $809,000 compared to $563,000 in the prior year, attributed to distribution partnerships and expanding deployments [6][12] - Gross loss improved to approximately $700,000 from $1.4 million a year ago, with cost of revenue slightly lower at $3.6 million compared to $3.7 million in Q1 2024 [8][12] - Operating expenses decreased by 9% year-over-year to $6.2 million, with R&D expenses up 35% to $2.1 million, while sales and marketing expenses were down 15% to $1.3 million [9][10][12] - Net loss for the quarter was about $7.6 million, an improvement from $8.3 million in Q1 2024, with earnings loss per share improving to $1.29 from nearly $4 per share last year [11][12] Business Line Data and Key Metrics Changes - The company is focused on achieving positive gross margins, scaling services and product footprint, and operating with increased efficiency [13] - The ASR (Autonomous Security Robots) and ECD (Emergency Communication Devices) segments are showing growth, with a backlog of approximately $2.5 million, including $1.9 million in ECDs and $600,000 in ASR-related orders [48] Market Data and Key Metrics Changes - The company is navigating macroeconomic uncertainties, particularly regarding tariffs, which may impact component pricing and lead times [18][20][21] - The management believes that the focus on national safety and security could provide tailwinds for the business despite the uncertainties [19][22] Company Strategy and Development Direction - The company is committed to long-term growth and shareholder value, focusing on scaling operations and investing in new technologies [28][55] - The management is actively pursuing government contracts and has established a Washington office to foster relationships with federal agencies [86][88] - The company is moving to a new facility to consolidate operations and improve efficiency, with plans for enhanced production capabilities [67][70] Management's Comments on Operating Environment and Future Outlook - Management expresses a positive outlook, emphasizing the importance of execution and the progress made in the past year [15][16] - The company acknowledges the challenges faced in the past, particularly related to funding, but is optimistic about the changes implemented [58][60] Other Important Information - The company is undergoing a significant transition, including moving to a new facility and restructuring its management team [34][52] - The management is focused on maintaining operational efficiency while scaling revenue and minimizing costs [39][40] Q&A Session Summary Question: How is macro uncertainty impacting customer conversations? - Management noted that while political uncertainty has less direct impact, financial aspects like tariffs could affect component pricing and lead times [18][20] Question: When will the company report positive EBITDA and earnings? - Management indicated that while they are focused on achieving positive earnings, the timing is yet to be determined [26][32] Question: What happened to Stacy Stevens? - The position was eliminated as part of a broader restructuring to improve efficiency [34] Question: How quickly will additional cost infrastructure be needed as revenue scales? - Management stated that they are cautious about adding costs and will scale revenue first before increasing infrastructure [35][36] Question: What is the status of the new facility? - The new facility is expected to be operational by August, with some anticipated disruptions during the move [43][46] Question: How does the order book look? - The current backlog is approximately $2.5 million, with significant orders in both ECDs and ASRs [48] Question: What are the plans for government contracts? - The company is actively pursuing additional government contracts and has already won a phase one contract with the Air Force [86][88]

Company Overview - Knightscope, Inc. (KSCP) is expected to report a year-over-year increase in earnings driven by higher revenues for the quarter ended March 2025, with a consensus estimate indicating a quarterly loss of $1.47 per share, reflecting a change of +63.3% year-over-year [1][3] - Revenues are projected to be $2.68 million, which represents a 19.1% increase from the same quarter last year [3] Earnings Expectations - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly reassessed their initial estimates [4] - The Most Accurate Estimate for Knightscope is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -11.95%, suggesting a bearish outlook from analysts [10] Historical Performance - In the last reported quarter, Knightscope was expected to post a loss of $1.88 per share but actually reported a loss of $0.78, resulting in a positive surprise of +58.51% [12] - Over the past four quarters, the company has only beaten consensus EPS estimates once [13] Industry Context - In the Zacks Technology Services industry, Bitfarms Ltd. (BITF) is expected to report a loss of $0.04 per share for the same quarter, indicating a year-over-year change of -100%, with revenues expected to be $65.47 million, up 30.1% from the previous year [17] - Bitfarms has seen a 16.7% downward revision in its consensus EPS estimate over the last 30 days, resulting in an Earnings ESP of -36.36% [18]

Core Viewpoint - Knightscope, Inc. (KSCP) has shown a significant price increase of 24.4% over the past four weeks, with a mean price target of $17.67 indicating a potential upside of 250.6% from the current price of $5.04 [1] Price Targets and Estimates - The mean estimate consists of three short-term price targets with a standard deviation of $12.50, where the lowest estimate of $9 suggests a 78.6% increase, and the highest estimate of $32 indicates a potential surge of 534.9% [2] - A low standard deviation among price targets suggests a high degree of agreement among analysts regarding the stock's price movement direction and magnitude [9] Analyst Sentiment and Earnings Estimates - Analysts have shown increasing optimism about KSCP's earnings prospects, as evidenced by a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [11] - Over the last 30 days, one estimate has increased, leading to a 6.9% rise in the Zacks Consensus Estimate for the current year [12] - KSCP holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for near-term upside [13]

Federal Contracts and Market Position - Knightscope has obtained FedRAMP Authority to Operate (ATO) in January 2024, enabling it to pursue federal contracts, including a pilot program with the U.S. Department of Veteran Affairs for the K5 GOV ASR[21]. - The U.S. physical security market is projected to reach $56.8 billion by 2030, driven by technological advancements and heightened public safety concerns[29]. - The company has been awarded a Phase 1 contract from the U.S. Air Force in 2025, further solidifying its position in the federal market[44]. - The company is actively seeking additional government contracts, including a Phase 1 contract from the U.S. Air Force, which may expose it to risks such as early termination and regulatory scrutiny[122]. Product Development and Innovation - Knightscope aims to expand its installed base of Autonomous Security Robots (ASRs) through a Machine-as-a-Service (MaaS) subscription model, enhancing long-term revenue streams[41]. - The K7 Autonomous Security Robot is planned for production in 2026, designed for large environments like airports and industrial zones, enhancing automated perimeter patrolling[45]. - Knightscope's ASRs provide 24/7 monitoring capabilities, reducing reliance on human security personnel and improving incident response times[33]. - Knightscope's comprehensive suite of solutions includes ASRs, emergency communication devices (ECDs), and the cloud-based Knightscope Security Operations Center (KSOC)[191]. - The company is investing in new product development, including the K7 ASR, and has increased its R&D headcount to support these initiatives[207]. Financial Performance and Challenges - The Company incurred a net loss of $31.7 million for the year ended December 31, 2024, compared to a net loss of $22.1 million for the year ended December 31, 2023, with an accumulated deficit of $193.2 million as of December 31, 2024[62]. - Cash and cash equivalents on hand were $11.1 million as of December 31, 2024, up from $2.3 million as of December 31, 2023[62]. - The Company had a total backlog of approximately $1.7 million as of December 31, 2024, consisting of $0.4 million related to ASR orders and $1.3 million related to ECD orders[56]. - The company expects fluctuations in financial results due to various unpredictable factors, including client demand and economic conditions[76]. - The company projects operating losses and negative cash flows for the foreseeable future, raising substantial doubt about its ability to continue as a going concern[130]. Operational and Management Structure - The Company has a total of 71 full-time employees as of December 31, 2024, and is not a party to any collective bargaining agreements[58]. - The company appointed a new Chief Financial Officer and reduced approximately 40% of executive and senior leadership roles to enhance operational efficiency[203]. - The company has implemented a series of strategic and structural changes to optimize resources and reduce costs, including relocating production and renegotiating long-term client contracts[213]. - The company anticipates continued impacts from its strategic actions into 2025 as it completes transitions and drives further efficiencies across the business[208]. Competition and Market Dynamics - The U.S. security guard industry faces labor shortages, with turnover rates ranging from 100% to 400% annually, driving demand for automated solutions[29]. - The company competes with traditional public safety services, autonomous security robotics, and emergency communication systems, with key competitors including Allied Universal, Asylon Robotics, and Code Blue Corporation[51]. - Increased competition from other companies developing physical security technology may impact the company's market position[98]. - The company may face increased competition in the private security industry, which could result in reduced prices and lower gross margins[121]. Regulatory and Compliance Issues - Compliance with evolving privacy laws and regulations could limit the company's ability to deploy technologies in various markets[99]. - The regulatory framework for privacy and security is rapidly changing, potentially requiring the company to modify its business practices[100]. - The California Consumer Privacy Act (CCPA) imposes specific requirements on businesses processing personal information of California residents, which could affect the company's operations[101]. - Noncompliance with data protection laws like the GDPR could result in fines of up to €20 million or 4% of annual global revenues[103]. - The company is subject to the UK GDPR, which carries penalties of up to £17.5 million or 4% of global annual revenue for noncompliance[104]. Cybersecurity and Risk Management - Knightscope's management team is focused on cybersecurity risk management, with Mercedes Soria serving as the Chief Intelligence Officer and CISO, overseeing the cybersecurity program[165]. - The company utilizes external service providers to assist with cybersecurity assessments and incident response[166]. - Knightscope's cybersecurity practices include employee training and a third-party risk management evaluation process for key service providers[166]. - The company is dependent on its cybersecurity risk management program, and any security breaches could lead to significant financial and reputational damage[114]. Supply Chain and Operational Constraints - The company has experienced supply chain constraints and increased costs for materials, components, and freight due to geopolitical conflicts and inflationary pressures, which may negatively impact financial performance[127]. - The Company relies on over 100 suppliers for its manufacturing needs, with the top three suppliers being Alco Metal Fab, Sybridge Digital Solutions LLC, and E and M Electric and Machinery Inc.[48]. Stock and Financing - The company issued unsecured Public Safety Infrastructure Bonds totaling approximately $4.3 million, with a 10% annual interest rate starting December 31, 2024[92]. - The company may need to engage in equity or debt financings to secure additional funds for operations and product development[130]. - The company has never paid cash dividends on its Class A Common Stock and does not anticipate doing so in the foreseeable future[136]. - Future issuances of debt securities may adversely affect the return on investment from Class A Common Stock, as these securities would rank senior in bankruptcy or liquidation[138]. Asset Management and Valuation - Finished ASRs net value decreased slightly from $8,845,000 in 2023 to $8,765,000 in 2024, a decline of 0.9%[223]. - The total value of raw materials decreased from $3,841,000 in 2023 to $2,465,000 in 2024, a decline of 35.7%[223]. - The company did not record any impairment losses for ASRs or other long-lived assets for the years ended December 31, 2024 and 2023[224]. - The total value of finished ASRs net increased from $3,429,000 in 2023 to $5,978,000 in 2024, an increase of 74.5%[223].

Financial Performance - Estimated preliminary financial results for the fiscal year ended December 31, 2024, indicate a revenue of approximately $53.1 million, with an estimated $11 million for the fourth quarter[7]. - Knightscope has raised over $40 million in 2024, improving its balance sheet and corporate governance structure[42]. - Knightscope aims to significantly grow its revenue profitably through a diversified business model that includes recurring revenue streams[31]. Market Opportunities - Knightscope targets a total addressable market (TAM) of $230 billion, with specific segments including $57 billion for public safety and government by 2025[28]. - The U.S. security services industry is projected to grow significantly, with estimates indicating a market size increase to $50 billion by 2028, reflecting a compound annual growth rate (CAGR) of 5% from 2023[1]. - The autonomous security robots market is expected to reach $2.5 billion by 2028, growing at a CAGR of 20% from 2023[2]. - Emergency communication systems are forecasted to grow at a CAGR of 8% from 2023 to 2030, with the market size anticipated to reach $10 billion by 2030[3]. - U.S. public and private sector security spending is estimated to exceed $300 billion in 2023, with a projected increase of 6% annually[4]. - The critical infrastructure protection and perimeter security market is expected to grow to $15 billion by 2028, with a CAGR of 7% from 2023[5]. - Retail security and loss prevention spending is projected to reach $20 billion in 2023, reflecting a 5% increase from the previous year[6]. - K-12 and higher education campus security budgets are estimated to grow by 4% in 2023, reaching a total of $5 billion[7]. - The casino and hospitality security expenditures are expected to increase to $3 billion by 2027, with a CAGR of 6%[8]. - The multifamily housing security market is projected to grow by 5% annually, reaching $8 billion by 2023[9]. Product Development - The company plans to launch the K7 Autonomous Security Robot and K1 Super Tower by 2026, enhancing its product offerings[7]. - Knightscope's autonomous security robots (ASR) operate on a subscription model ranging from $1 to $11 per hour, providing a cost-effective alternative to traditional security services[26]. - Knightscope's technology generates over 200 terabytes of data annually per machine, providing real-time intelligence and physical deterrence against crime[21]. Strategic Initiatives - The company is focusing on organic and inorganic growth, including partnerships with Verizon Frontline to enhance telecommunications for first responders[40]. - The management team has undergone restructuring, reducing the management team by one-third and optimizing operations for future growth[43]. - Knightscope's proprietary market projections indicate a strong demand for security solutions, with anticipated revenue growth driven by customer requests for proposals (RFPs) and competitive landscape analysis[10]. Regulatory and Compliance - The company has achieved Authority to Operate (ATO) with the U.S. Federal Government, positioning itself for long-term sustainable growth[7].

Revenue Performance - Total revenue for the three months ended September 30, 2024, was $2.535 million, a decrease of 23.8% compared to $3.324 million for the same period in 2023[21]. - Service revenue for the three months ended September 30, 2024, was $1.861 million, down from $1.915 million in the same period last year, reflecting a decline of 2.8%[21]. - Product revenue decreased significantly to $674,000 for the three months ended September 30, 2024, compared to $1.409 million in the prior year, representing a decline of 52.1%[21]. - Total revenue for Q3 2024 decreased by approximately $0.8 million to $2.535 million, with service revenue at $1.861 million (73% of total) and product revenue at $0.674 million (27% of total)[143]. - Total revenue recognized from ASRs for the nine months ended September 30, 2024, was $1,324 million, with $1,211 million recognized at a point in time and $1,143 million recognized over time[76]. - Total revenue, net for the nine months ended September 30, 2024, was approximately $8.0 million, a decrease of approximately $1.8 million or 18% compared to the same period in the prior year[158]. Financial Losses - Gross loss for the three months ended September 30, 2024, was $(700,000), compared to a gross profit of $50,000 for the same period in 2023[21]. - Net loss for the three months ended September 30, 2024, was $(10.904 million), compared to a net loss of $(8.342 million) for the same period in 2023, indicating a deterioration of 30.6%[21]. - Net loss for the nine months ended September 30, 2024, was $24,767,000, compared to a net loss of $15,584,000 for the same period in 2023, representing a 58.8% increase in losses[31]. - Gross loss for the nine months ended September 30, 2024, was approximately $2.7 million, compared to a gross loss of approximately $0.2 million for the same period in 2023[164]. Operating Expenses - Total operating expenses increased to $7.041 million for the three months ended September 30, 2024, up from $6.533 million in the same period last year, marking an increase of 7.8%[21]. - Total operating expenses increased to $7.041 million (278% of total revenue) in Q3 2024, up from $6.533 million (197% of total revenue) in Q3 2023[142]. - Research and development expenses for the nine months ended September 30, 2024, were $414,000, compared to $274,000 in the prior year[96]. - Research and development expenses increased by approximately $0.2 million, or 4%, for the nine months ended September 30, 2024, primarily due to higher headcount[165]. - Sales and marketing expenses decreased by approximately 28% to $1.000 million, representing 39% of total revenue in Q3 2024[150]. - General and administrative expenses increased by approximately 31% to $4.238 million, representing 167% of total revenue in Q3 2024[151]. Cash and Assets - Cash and cash equivalents as of September 30, 2024, were $5.199 million, significantly up from $2.282 million as of December 31, 2023[19]. - Total current assets increased to $11.529 million as of September 30, 2024, compared to $8.213 million as of December 31, 2023, reflecting a growth of 40.5%[19]. - Cash and cash equivalents increased to $5,301,000 as of September 30, 2024, up from $4,711,000 at the end of September 2023[31]. - The company reported a net loss of approximately $24.8 million for the nine months ended September 30, 2024, leading to net cash used in operating activities of approximately $17.4 million[186][187]. Stock and Equity - Total stockholders' equity improved to $9.255 million as of September 30, 2024, compared to a deficit of $(26.634 million) as of December 31, 2023[19]. - The company executed a 1-for-50 reverse stock split of its common stock in September 2024, impacting share amounts[26]. - The company executed a reverse stock split of Class A and Class B Common Stock at a ratio of 1-for-50, effective September 13, 2024[64]. - The company issued 1,470,537 shares of Class A Common Stock under the at-the-market offering program, generating net proceeds of approximately $20.4 million during the nine months ended September 30, 2024[177]. Liabilities - Total liabilities as of September 30, 2024, were $15.667 million, slightly up from $15.405 million as of December 31, 2023[19]. - The company has outstanding obligations of approximately $1.8 million under the August 2024 Note as of November 13, 2024[183]. - The company’s total liabilities included warrant liabilities of $5,692 million for Series S Preferred Stock as of September 30, 2024[81]. Future Outlook and Financing - The company is dependent on additional fundraising to sustain ongoing operations, indicating a need for further capital within the next twelve months[37]. - The company is pursuing additional financing through equity and/or debt alternatives to meet its capital and operational needs[171]. - The company plans to seek additional funding, which may result in the dilution of existing stockholders' interests[171].

Core Insights - Verizon Business has partnered with Knightscope to enhance safety at commercial and government facilities through the deployment of autonomous security robots and emergency communication devices [1][5] - The Knightscope K5 security robot has received a FedRAMP Moderate Authority to Operate designation, indicating its compliance with security standards [2] - Verizon aims to integrate 5G technology into the K5 ASR, enhancing its capabilities for real-time data transmission and monitoring [3] Company Developments - The K5 ASR operates autonomously in large outdoor spaces and is designed to function in extreme weather conditions, providing continuous surveillance [3] - Verizon also supports Knightscope's K1 Blue Light Tower and E-Phones, which are wireless emergency communication devices that operate independently and assist first responders [4] - The partnership with Knightscope is part of Verizon's broader strategy to serve the U.S. Department of Veterans Affairs, including a $448.3 million expansion to supply mobile devices and critical communications support [5] Financial Performance - Verizon generated revenues of $134.0 billion in 2023, showcasing its strong market position and commitment to innovation [6]

Financial Data and Key Metrics Changes - For Q2 2024, total net revenues were reported at $3.2 million, a decrease of $0.4 million or 10% compared to the same period last year, primarily due to lower product revenue offsetting gains in services revenue [33] - Services revenue increased by $0.1 million to approximately $2 million, while product revenue declined by $0.5 million to approximately $1.3 million due to a lack of a large one-time sale that occurred in the prior year [33] - The company recorded a gross loss of $0.6 million, a significant change from a gross profit of $9,000 reported in the prior year [35] - Net loss for the quarter was $6.3 million, approximately $1.5 million higher than the prior year, with a basic and diluted net loss per share of $0.05 compared to a loss of $0.08 in the prior year [38] Business Line Data and Key Metrics Changes - The K1B product line contributed approximately two-thirds of the business, while ASR-related products accounted for about one-third of revenues [51] - The K1 Hemisphere product has been introduced and is expected to drive initial growth, with various applications being explored [50] Market Data and Key Metrics Changes - The company believes it is targeting a multibillion-dollar market opportunity in public safety, law enforcement, and security, which is seen as ripe for disruption through robotics and AI [5][6] - The potential for a $40 billion recurring revenue opportunity is anticipated once the business model is fully established [7] Company Strategy and Development Direction - The company is focused on cleaning up its balance sheet and aligning with public company structures, which includes converting preferred shares to common shares [42][44] - Strategic initiatives include the development of the Intelligence Control Module (ICM) to unify various product architectures and improve operational efficiencies [17][46] - The company aims to scale up operations while reducing costs and improving efficiencies across its product lines [12][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that 2024 is a transition year, with expectations of continued challenges as the company implements significant changes [34][41] - The management expresses confidence in the long-term potential of the company, emphasizing the importance of execution and operational improvements [2][3] Other Important Information - The company has raised over $5 million in funding and continues to utilize an active ATM program for capital [45] - The company has successfully deployed its first K5 government machine at a U.S. Department of Veterans Affairs Hospital [9] Q&A Session All Questions and Answers Question: What were the orders for K1 Hemisphere versus a year ago? - The K1 Hemisphere was not in production a year ago, and it is now seen as an initial growth driver with various applications being explored [50] Question: What percentage of sales are ASRs versus the Blue Light products? - Approximately two-thirds of the business is K1B-related, while about one-third is ASR-related [51] Question: How much cash on hand on the balance sheet at the end of Q2? - Cash on hand was reported at $2.6 million at the end of the quarter, oscillating between $2 million and $5 million over the last 18 months [55] Question: What is the status of the investigation into possible legal actions of the short seller? - The investigation is ongoing, and there are no updates to provide at this time [60] Question: Why do press releases mention new contracts but not their impact on profit loss? - Announcements of new contracts are made to assist the sales team and provide visibility, but the financial impact may not be immediate [62]

Revenue Performance - Total revenue for the three months ended June 30, 2023, was $3,203,000, a decrease of 10.1% compared to $3,563,000 for the same period in 2022[16]. - Service revenue for the six months ended June 30, 2023, was $3,641,000, up from $3,573,000 in the same period last year, reflecting a growth of 1.9%[16]. - Total revenue for the three months ended June 30, 2024 decreased by approximately $0.4 million compared to the same period in the prior year, with Product revenue decreasing by approximately 28%[121]. - Service revenue, net for the three months ended June 30, 2024 increased approximately 7% compared to the same period in the prior year due to an increase in Service revenue related to the K1B installed base[121]. - Total revenue for the six months ended June 30, 2024, was $5.457 million, a decrease of approximately 15.5% from $6.460 million for the same period in the prior year[133]. - Service revenue increased by approximately $0.1 million or 2% to $3.641 million, while product revenue decreased by approximately $1.1 million or 37% to $1.816 million[134]. Profit and Loss - Gross profit for the three months ended June 30, 2023, was a loss of $558,000, compared to a profit of $9,000 for the same period in 2022[16]. - Net loss for the three months ended June 30, 2023, was $6,271,000, compared to a net loss of $4,798,000 for the same period in 2022, representing a 30.7% increase in losses[16]. - The gross loss for the three months ended June 30, 2024 was approximately $0.6 million, compared to a gross profit of $9 thousand for the same period in 2023[125]. - Gross loss for the six months ended June 30, 2024, was approximately $2.0 million, compared to a gross loss of approximately $0.2 million for the same period in the prior year[138]. Operating Expenses - Total operating expenses for the three months ended June 30, 2023, were $6,203,000, an increase of 4.2% from $5,954,000 in the prior year[16]. - Research and development expenses for the three months ended June 30, 2023, were $1,637,000, an increase of 10.5% from $1,482,000 in the prior year[16]. - Sales and marketing expenses for the three months ended June 30, 2023, were $1,537,000, up from $1,193,000, reflecting a growth of 28.8%[16]. - Research and development expenses increased by approximately $0.3 million or 11% to $3.206 million, representing 59% of total revenue[139]. - Sales and marketing expenses rose by approximately $0.7 million or 31% to $3.043 million, accounting for 56% of total revenue[140]. - General and administrative expenses decreased by approximately $0.5 million or approximately 8% to $6.375 million, representing 117% of total revenue[141]. Equity and Stockholder Information - As of June 30, 2023, total stockholders' deficit was $25,318, reflecting an increase from $43,586 as of December 31, 2022[18]. - The company reported a net equity of $4,676 million as of June 30, 2023, down from $4,818 million at the end of 2022[18]. - The cumulative deficit as of June 30, 2023, was $146,582, an increase from $139,340 at the end of 2022[18]. - The company converted 10,432,428 debt obligations to Class A common stock, enhancing its equity position[18]. - As of June 30, 2024, the company had total stockholders' equity of approximately $11.2 million[144]. - The Company’s total stockholders' equity was approximately $11.2 million as of June 30, 2024[144]. Cash Flow and Financing - The company experienced a net cash used in operating activities of $12,642,000 for the six months ended June 30, 2024, compared to $11,215,000 for the same period in 2023, indicating a 13% increase in cash outflow[24]. - Cash and cash equivalents at the end of the period were $2,726,000 as of June 30, 2024, down from $5,942,000 as of June 30, 2023, reflecting a decrease of approximately 54%[24]. - The company raised $12,089,000 from equity sales, net of issuance costs, during the six months ended June 30, 2024, compared to $14,236,000 in the same period of 2023, indicating a decrease of approximately 15%[24]. - Net cash used in operating activities was approximately $12.6 million for the six months ended June 30, 2024, an increase of approximately $1.4 million compared to the same period in the prior year[155]. - Net cash provided by financing activities was approximately $14.8 million for the six months ended June 30, 2024, an increase of approximately $0.3 million compared to the prior year[159]. - The company is actively seeking additional financing to meet its capital and operational needs, which may include equity and debt alternatives[144]. Compliance and Regulatory Issues - The Company received a delisting determination letter from Nasdaq due to non-compliance with the Minimum Bid Price Requirement, with trading suspension effective May 3, 2024[110]. - The Company received a temporary exception until October 4, 2024 to regain compliance with the Minimum Bid Price Requirement, contingent upon obtaining shareholder approval for a reverse stock split by August 16, 2024[111]. - The Automatic Conversion on May 15, 2024 resulted in the Company reflecting a positive stockholders' equity on its Condensed Balance Sheet, satisfying the Minimum Stockholders' Equity Requirement as of June 30, 2024[112]. Operational Changes - The Company streamlined its management structure and outsourced non-core business functions to improve operational efficiency[103]. - The Company consolidated its manufacturing operations from three facilities to one primary facility in Mountain View, California, to enhance process flow and reduce costs[104]. - The Company is focused on optimizing operations to achieve profitable growth while scaling its business to meet incoming demand[115].

Financial Performance - Total revenue for Q1 2024 was $2,254,000, a decrease of 22% compared to $2,897,000 in Q1 2023[22] - Net loss for Q1 2024 was $7,592,000, compared to a net loss of $2,444,000 in Q1 2023, representing a 210% increase in losses year-over-year[22] - The gross loss for Q1 2024 was $1,445,000, compared to a gross loss of $213,000 in Q1 2023[22] - Total revenue for the three months ended March 31, 2024, was $2,254 million, compared to $2,897 million for the same period in 2023, reflecting a decline in both ASR and ECD revenues[74] - Service revenue remained relatively flat at $1.691 million, while product revenue decreased by approximately $0.6 million to $0.563 million due to structural changes in the ECD product line[132] - Total other income decreased by approximately $3.4 million, or 83%, to $0.688 million for the three months ended March 31, 2024, compared to $4.077 million in the same period of 2023[143] Cash Flow and Liquidity - Net cash used in operating activities was $8.611 million for Q1 2024, up from $6.483 million in Q1 2023, indicating worsening cash flow from operations[28] - Cash and cash equivalents increased to $2,487,000 as of March 31, 2024, up from $2,282,000 as of December 31, 2023[18] - Cash and cash equivalents at the end of the period were $2.587 million, an increase from $2.475 million at the end of Q1 2023[28] - The company reported a net cash provided by financing activities of $9.710 million in Q1 2024, compared to $4.915 million in Q1 2023[28] - The company is dependent on additional fundraising to sustain operations, indicating potential liquidity challenges in the next twelve months[36] Assets and Liabilities - Total current assets rose to $9,921,000 as of March 31, 2024, compared to $8,213,000 as of December 31, 2023, reflecting an increase of 20.8%[18] - Total liabilities increased to $16,616,000 as of March 31, 2024, up from $15,405,000 as of December 31, 2023, indicating a rise of 7.9%[18] - The company reported a total stockholders' deficit of $26,638,000 as of March 31, 2024, slightly increased from $26,634,000 as of December 31, 2023[18] - The total assets of the company increased to $23,993,000 as of March 31, 2024, compared to $22,974,000 as of December 31, 2023, marking a growth of 4.4%[18] - The accumulated deficit as of March 31, 2024, was approximately $169.1 million, with a stockholders' deficit of approximately $26.6 million[36] Research and Development - Research and development expenses for Q1 2024 were $1,569,000, an increase of 12.3% from $1,397,000 in Q1 2023[22] - Research and development expenses increased by approximately $0.172 million, or 12%, to $1.569 million, representing 70% of total revenue[138] Stock and Equity - The number of weighted average shares used to compute basic and diluted net loss per share increased to 96,365,979 in Q1 2024 from 42,746,330 in Q1 2023[22] - The Company issued 13,512,738 shares of Class A Common Stock under its at-the-market offering program, generating net proceeds of approximately $7.1 million during the three months ended March 31, 2024[90] - The total preferred stock outstanding as of March 31, 2024, was 9,473,084 shares, with net proceeds from issuance amounting to $34,015 million[88] - The Company had a total of 25,154,887 shares of Class A Common Stock reserved for future issuance as of March 31, 2024[89] Operational Challenges and Future Outlook - The Company is focused on streamlining operations and reducing costs, particularly in its K1B product line, to achieve profitable growth[109] - The Company expects fluctuations in results of operations throughout 2024 due to its transition and cost-streamlining efforts[113] - The Company believes the demand for automated security solutions will grow due to rising crime rates and security breaches[123] - The Company is evaluating actions to improve production methods, cost, quality, and product features in response to potential competition[126] Other Financial Metrics - The total stock-based compensation expense recognized for the three months ended March 31, 2024, was $334 million, down from $446 million in the same period of 2023, indicating a decrease of about 25%[87] - The warranty liability decreased from $406 million at the beginning of the year to $341 million by March 31, 2024, with a provision of $41 million issued during the quarter[59] - The Company had unamortized stock-based compensation expense of $2.3 million as of March 31, 2024, which will be recognized over a weighted average remaining vesting term of 2.52 years[86]